The Office of General Counsel issued the following informal opinion on
May 2, 2001, representing the position of the New York State Insurance Department.

Re: No-Fault Inter-Company Loss Transfer

Question Presented:

Would a motor vehicle, which weighs 6,500 pounds or less and which is
used by its owner for commercial deliveries of the owners own product, be subject to
the loss transfer provisions set forth in N.Y. Ins. Law § 5105(a) (McKinney 2000) when
the owner charges its customers a fee for the delivery?

Conclusion:

No. Such a motor vehicle is not a motor vehicle "used principally
for the transportation of persons or property for hire" within the meaning of N.Y.
Ins. Law § 5105(a) (McKinney 2000), notwithstanding the fact that the owner charges its
customers a fee for the delivery.

Facts:

Company A has presented a situation where the owner of a retail florist
business owns a commercial vehicle that is used to deliver flowers to customers. It is
Company As contention that a "for hire" situation is created where the
owner charges a delivery fee because the delivery vehicle has become a "revenue
generating vehicle."

Analysis:

N.Y. Ins. Law § 5105(a) (McKinney 2000) provides in pertinent part as
follows:

Any insurer liable for the payment of first party benefits to or on
behalf of a covered person and any compensation provider paying benefits in lieu of first
party benefits which another insurer would otherwise be obligated to pay pursuant to
subsection (a) of section five thousand one hundred three of this article or section five
thousand two hundred twenty-one of this chapter has the right to recover the amount paid
from the insurer of any other covered person to the extent that such other covered person
would have been liable, but for the provisions of this article, to pay damages in an
action at law. In any case, the right to recover exists only if at least one of the motor
vehicles involved is a motor vehicle weighing more than six thousand five hundred pounds
unloaded or is a motor vehicle used principally for the transportation of persons or
property for hire.

In
State Farm Mutual Automobile Insurance Company v. Aetna Casualty
and Surety Company, 132 A.D.2d 930, 518 N.Y.S.2d 263 (4th Dept. 1987),
affd,
71 N.Y.2d 1013, 530 N.Y.S.2d 106 (1988), the Appellate Division, in reversing the order of
the Special Term which denied the petitioners application for a permanent stay of
the arbitration sought by the respondent under the loss transfer provisions of N.Y. Ins.
Law § 5105(a), said in pertinent part as follows:

The purpose of the 1977 amendment to Insurance Law § 5105 [(a), which
added the language limiting loss transfer to cases involving motor vehicles weighing more
than 6,500 pounds or motor vehicles used principally for the transportation of persons or
property for hire,] was to limit the right of insurance carriers to recover first party
payments [citing case]. To accept Special Terms interpretation that the words
"for hire" modify the words "persons or property," would frustrate
this purpose by permitting a loss transfer claim in almost all cases involving commercial
deliveries by an owner of a vehicle. Although the statute is unartfully drafted, we
believe that the words "for hire" modify the word "vehicle" and that
the statute covers only those vehicles hired to transport people, such as taxis and buses,
and livery vehicles hired to transport property.

Given these limited exceptions, it is clear that a motor vehicle, which
weighs 6,500 pounds or less and which is used by its owner for commercial deliveries of
the owners own product does not constitute a motor vehicle "used principally
for the transportation of persons or property for hire" within the meaning of N.Y.
Ins. Law § 5105(a) (McKinney 2000), notwithstanding the fact that the owner charges its
customers a fee for the delivery. Accordingly, such a motor vehicle would not be subject
to the loss transfer provisions set forth in N.Y. Ins. Law § 5105(a) (McKinney 2000).

For further information you may contact Senior Attorney Ethan G. Wolfe
at the New York City Office.

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